Obama proposes new rule to examine gender pay inequity

This undated handout photo provided by the Equal Opportunity Employment Commission (EEOC) shows EEOC Chair Jenny Yang. Federal regulators are proposing limits on how employers use financial penalties and rewards to nudge employees to participate in fast-growing workplace wellness programs. The EEOC _ which enforces laws against discrimination _ said Thursday that employers can use financial incentives up to 30 percent of the cost of premiums for single coverage, provided certain other safeguards are met. (Peter Cutts/EEOC via AP)

Photo: Peter Cutts, HOGP

WASHINGTON - President Barack Obama proposed a rule Friday that would require every large company in America to report employees' pay based on race and gender, an effort to reduce longstanding pay inequities for women and minorities.

The new policy, already drawing criticism from some business leaders, would order companies with at least 100 employees to add salary numbers on a form they already annually submit that reports employees' sex, age and job groups. The pay information would alert the EEOC to companies with significant wage disparities, which could result in hefty fines.

"Oftentimes, folks are doing the same job and being paid differently," Obama said in a speech at the White House. "The goal is to help businesses who are trying to do the right thing get a clearer picture of how they can ensure their employees are being treated fairly."

Obama said more must be done to get women into high-paying jobs, including those in science, technology, math and engineering. In recent years, the pay disparity has narrowed slightly, but a woman in the U.S. still makes 79 cents to a man's dollar, the White House said.

During the updated data collection process, officials would not publicly name employers or employees, said Jenny Yang, chairwoman of the Equal Employment Opportunity Commission, which published the proposed rule with the Department of Labor. If the agency files a discrimination lawsuit as a result of the findings, however, companies would appear in public record.

For instance, if a firm's data shows typical female managers earn 25 percent less than typical male managers, the government may launch an investigation - and, lawyers say, workers who take discrimination complaints to the EEOC would have extra ammunition if company numbers supported their case. The administration estimated that compliance will cost less than $400 per employer the first year and a few hundred dollars per year after that.

Since the White House established its Equal Pay Task Force in 2010, Yang added, the agency has collected from firms more than $85 million in employee-relief checks.

The EEOC also intends to turn the aggregated data into an annual salary report, showing the average pay for workers in different sectors and industries across the country, starting next year. If the new policy is approved the by Office of Management and Budget and enacted by its September deadline, the first report would be published a year later.

"Pay discrimination goes undetected because of a lack of accurate information about what people are paid," Yang said at the White House conference. "Collecting this pay data would help fill a critical void we need to ensure American workers receive fair pay for their work."

The proposal expands on Obama's 2014 executive order that required all federal contractors to submit similar salary data by gender and race. The measure also abolished gag rules that prevented those contractors from discussing their pay.

Detractors say the policy change would create an unnecessary government overreach. Roughly 67,000 employers would have to take on the extra paperwork.

Randy Johnson, senior vice president of Labor, Immigration, and Employee Benefits for the U.S. Chamber of Commerce, said that, though the organization supports equal pay for equal work, the new rule would place an unnecessary burden on employers while providing no "meaningful insight."

"Clearly the administration has embarked on one more fishing expedition to support a political agenda divorced from the facts," Johnson said. "Sound bites don't make sound policy."

David Cohen, president of DCI Consulting Group, a consulting firm that leads business' pay-equity studies, said the proposal is undermined because it will compare pay of workers with vastly different jobs, markets and abilities. The summarized data will be reported across 10 broad job categories - "professionals," for instance, range from doctors and nuclear engineers to social workers - that could muddle the results.

"If the goal of this report is to raise awareness, that we're the government and we care deeply about this wage gap ... that's great," he said. "If the goal is to use this report as a predictor of discrimination, it will fail."

Civil rights attorney Debbie Katz said the new rule would be more than a symbolic call for wage equality. Workers who take their discrimination cases to the EEOC, she said, would have objective numbers to back them up.